Public/Private Partnerships

Public/private partnerships (PPPs) are agreements between public agencies and private sector entities whereby each party agrees to contribute assets, skills, or other resources in return for sharing in the costs and benefits of the project. Local governments are working more often with private partners—for-profit companies as well as nonprofit/community-based organizations—to help deliver and manage local infrastructure and services. Examples of different types of PPPs include a joint development and parking management district.

Joint Development

Joint development refers to a real estate development project that involves a cooperative arrangement between a private sector entity and a public entity like a city, county, redevelopment agency, or transit agency. Joint development arrangements can take a number of forms, including the sale or lease of publicly owned land or air rights for specific types of development, or joint construction of a transit or other public facility. Depending on the particular arrangement, the public and private partners can share costs, revenues, and/or financial risk. Joint development is only applicable where the public sector owns land.

Joint development can allow a public agency to benefit from a private developer’s expertise and access to credit, while maintaining some control over the use of public property and potentially receiving revenues from the development. From the private developer’s perspective, partnering with a public agency can provide access to subsidy or an agency’s bonding capacity, and/or help defray some of the risks associated with development. On the other hand, joint development can have downsides for both parties, leaving the public sector exposed to financial risk and reducing the private developer’s flexibility.